Korean shipbuilders vie for 60 Qatari LNG ships

S. Korea Yard

Competition is heating up among Korean shipbuilders to win 60 anticipated orders from Qatar, which would expedite the domestic shipbuilding industry’s rebound from a long slump, industry analysts said.

They said a key point will be about how many empty shipbuilding slots each company can secure before commencing construction.

According to industry officials, last month the state-run Qatar Petroleum sent invitations to tender reserve shipbuilding capacity for LNG carriers to major shipbuilders across the world, including Korea’s Hyundai Heavy Industries, Daewoo Shipbuilding & Marine Engineering (DSME) and Samsung Heavy Industries.

An official at one of three shipbuilders, who declined to be named, said they were anticipating the oil firm will begin reserving slots as early as September and then sign actual contracts at the end of this year.

The move comes after Qatar’s energy minister, Saad Sherida Al-Kaabi, who is also CEO of Qatar Petroleum, said the company plans to order 60 new LNG carriers, during a visit to Cheong Wa Dae in January.

Recently, the energy minister said the company’s “LNG shipbuilding acquisitions are expected to initially number 60 LNG carriers in support of planned production expansion, with a potential to exceed 100 new carriers over the next decade.”

This is in line with the company’s plan to increase its LNG output from the current 77 million tons a year to 110 million by 2024 to meet increasing demand.

Domestic shipbuilders are confident about winning orders, citing they won 61 LNG carrier orders last year, which accounts for 86 percent of the world’s total.

“Global shippers’ demand for Korean LNG carriers is increasing, especially after the LNG carrier CESI Gladstone built by a Chinese firm broke down and was scrapped just two years after going into operation,” Industrial Bank of Korea analyst Jeon Joon-mo said.

“There is no doubt that Korean shipbuilders have advanced technology and expertise in building LNG carriers, and they have history of building LNG vessels for Qatar Petroleum from 2004 to 2007” another shipbuilding firm official said. “The question is when will be the deadline of delivery for the new orders.”

Currently, most dockyards for LNG carriers in Korea are fully booked up to 2021 as domestic firms almost swept global orders whose deadlines are between 2021 and 2022 over the past several years

Citing this, some industry analysts question whether the domestic shipbuilders can secure enough slots for Qatari orders.

The official said deadlines are confidential, but shipbuilders don’t believe the booked reservations will cause a huge problem. “Qatar Petroleum will likely set deadlines after 2022, because it is well aware of domestic shipbuilders’ backlog. Also, the demand for new ships will start from 2024 when the petroleum firm starts shipping its increased volume.”

Source: Korea Times

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